M-Agri services for small-scale farmers

Although 2.3 billion people around the world depend on agriculture for their livelihoods, a majority of the over 500 million small-scale farmers – who produce 70% of the world’s food – have limited or no access to critical agricultural information and finance. This has led to not only reduced food production but a negative economic impact on the lives and livelihoods of small-scale farmers.

At a recent event GSMA mAgri recently asked industry players “How can mobile phones and services be used to fulfil the socio-economic potential of agriculture?” Stakeholders in Nairobi discussed this question in order to learn from each other’s experiences and identify new paths which they could explore to unleash the massive potential of agriculture.

Creating value for small-scale farmers

Pauline Vaughn from M-Kopa, a solar company using mobile technology to revolutionize the energy sector, spoke of her company’s experiences in trying to ensure they create value to their users. In its 4 years of existence, M-Kopa has been able to provide its solar solution to 350,000 households in Ghana, Kenya, Tanzania and Uganda.

One of the main lessons Pauline shared was the fact that industry players have to carry out thorough market research before tackling the market. She acknowledged the fact that there were other solar companies that came into the market before M-Kopa but most of them turned a deaf ear to the reality that most small-scale farmers are unable to purchase solar solutions at one go. M-Kopa listened to the small-scale farmers and created a product that would meet their needs.

Habib Saqib, from Telenor Pakistan, agreed with Pauline. He felt that most stakeholders when designing products/services felt they did not need to involve their customers as they already knew what they needed. From his experience, such assumptions usually have disastrous results. Telenor Pakistan, therefore made a conscious decision to work with farmers when designing their mobile agriculture product. He believes many farmers prefer using their product to others in the market because of this.

Financial inclusion of small-scale farmers

A majority of the stakeholders at the GSMA mAgri event agreed that lack of access to financial services was still one of the biggest challenges small-scale farmers face. Although farming is a very capital intensive venture, a majority of farmers either cannot or do not access financial services. This lack of access to financial services has had a negative impact as small-scale farmers have been unable to move from subsistence farming to agribusiness.

One of the contentious issues when it comes to financing farmers is the repayment schedule of loans. Most financial institutions require the monthly repayment of loans. This tends to be difficult for farmers because they do not receive month on month income from their farming.

Farmers earn most of their income when they sell their produce or livestock which may take a number of months to occur. Working out alternate repayment schedules to cater to the farming cycle has led to the increase in interest rates for small-scale farmers.

Another problematic issue is that of financial institutions being able to assess the creditworthiness of farmers. A majority of small-scale farmers do not keep financial records. This has made it very difficult for financial institutions to assess the creditworthiness of farmers. As a result, financial institutions are either unwilling to provide facilities to small-scale farmers (they are not sure whether they will get their money back) or provide them with financial facilities at high interest rates (to cover their risk). Both outcomes are also unfavourable to small-scale farmers.

Despite the challenges, all financial institutions in attendance agreed that finding solutions to these problems will be crucial because enabling small-scale farmers to access financial institutions will go a long way in ensuring financial services are accessible by a majority of the world populace. They also agreed that one of the sure ways of enabling all small-scale farmers to access financial services is by use of mobile telephones.

Data Driven mAgri Services

My take from the GSMA event is that the future of mAgri lies in data driven mAgri services. With good data on small-scale farmers, financial institutions will be able to understand farmer trends and have enough information to determine the creditworthiness of farmers. Actionable data will enable financial institutions to provide financial services to small-scale farmers.

With good data on small-scale farmers, companies will be able to understand farmer needs and wants and tailor their products and services accordingly. Actionable data will enable companies and organizations to make sure they know and meet small-scale farmers’ desires.

With good data on small-scale farmers, mAgri Services will become a reality.